Tax and legal advice

Negative gearing changes ‘disastrous’

By Reporter

One state is set to bear the brunt of Labor’s controversial new negative gearing limits, with many towns that are still reeling from the resources downturn likely to take an additional hit to housing affordability and supply, according to a peak real estate body. 

The Real Estate Institute of Queensland (REIQ) has warned that the state's resource-based property markets are set to be devastated by Labor's changes to negative gearing and capital gains tax, should they be legislated. 

Mackay leads the country for negatively-geared properties, with 5,755 property owners who negatively gear their investment. Gladstone and Cairns each have about 4,000 investors who negatively gear their property, according to ATO figures.

“Mackay and Gladstone are still struggling, years later, to regain their equilibrium. Another hit, like these changes to negative gearing, would be absolutely disastrous for these communities,” REIQ chief executive Antonia Mercorella said.

“Without negative gearing and CGT benefits, and with no new building going on, investors will desert these towns.”

Ms Mercorella questioned why Labor wanted to “punish this one asset class” and make it less attractive compared with other investment opportunities.

“Labor is only guessing at the outcome of its policy, hoping that it will stimulate new dwelling construction, but it’s equally possible that investors will simply abandon property altogether,” she said.

Ms Mercorella said investors made up about a third of all property owners in Queensland and only seven per cent of those owners accessed negative gearing in new builds. She warned that if investors abandoned property in significant numbers, it would spell disaster for the state budget.

“Stamp duty is the cash cow of the Queensland state budget, and if investors are driven away from established property ownership it would leave a huge hole in the state’s budget,” she said.

Ms Mercorella said the Labor strategy of driving investors to the new-build market would also make a mockery of the state government’s Great Start Grant. The grant is designed to drive first home buyers to the new-build market and free them from competing with so-called “deep pocket” investors.

“Why are we giving first home buyers a $15,000 grant to buy off-the-plan or build, but then forcing them to compete with investors who have been driven to the new-build market to access negative gearing and CGT benefits?

“It’s a very confused strategy,” she said.

Ms Mercorella said Labor’s policy preyed on the commonly held misconception that negative gearing benefited property barons.

ATO figures have revealed about 70 per cent of property investors accessing negative gearing own just one property and earn around $80,000.

“These measures target mum-and-dad investors who are simply trying to get ahead and create a reasonable retirement package,” she said.

“The property investor is tired of being the ATM for the government – whenever they want to fund something they go to the property sector for a cash injection.”

Read more: 

Is Sydney experiencing a second coming? 

Can you guess Australia's worst-performing suburbs of the decade? 

My sink-or-swim investment strategy

City's values see 100% increase 

Eliminating property purchase anxiety

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  ["title"]=>
  string(72) "Mortgages in a tighter lending economy and why Brisbane is a good option"
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Tune in to the latest episode of Property Showcase, the podcast with the inside track on the products and businesses that will help turbocharge your portfolio, maximise returns and make your overall investment experience seamless and stress-free!

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To hear more about these services, make sure to tune in to this episode of Property Showcase!

 Make sure you never miss an episode by subscribing to us now on iTunes!

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Son Pham is the accredited Head of Mortgages at Rethink Financing\/Rethink Investing. He has over 6 years\u2019 experience writing loans, over 12 years in the wealth management industry working for the likes of CBA, AMP and private practice and he is also a licenced financial planner (AFSL 326450). He has multiple investment properties that are cash flow positive which help pay his mortgage on his home and fund his lifestyle.<\/p>\r\n

Son is able to write all types of residential and commercial property loans.<\/p>\r\n

In this episode of Property Showcase, head of mortgages at Rethink investing Son Pham joins host Tim Neary to unpack how an investor should approach getting a mortgage in place with banks tightening down on serviceability.<\/p>\r\n

Hear from\u00a0Son\u00a0about:\u00a0<\/p>\r\n

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    In this episode of Property Showcase, director of investment services for Open Corp Michael Beresford,\u00a0joins\u00a0editor of Real Estate, Tim Neary to share why he disagrees that the cooling market means that the best times are behind us.<\/p>\r\n

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Will Magee has had ambitions to enter into the Australian property market for quite some time, but it has been more than just finances holding him back.  Having been granted permanent residency just two weeks ago, Will is wasting no time and is now in the process of signing papers and finding his first investment property.

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In this episode of the Smart Property Investment Show, Will joins host Phil Tarrant to share why he is purchasing his first property in partnership with his brother, discuss the complications that can arise from such a strategy, and unpack the ongoing plan for building a joint property portfolio with his brother.

Will will also share how they approached saving for their first property, why he is taking out the mortgage in his name exclusively, and share their savings plan for the year ahead.

If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn.

If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!

RELATED AREAS OF INTEREST:

From property in Australia to a ski lodge in Japan
Mortgage Trusts, an alternative first step for property investors
Should a real estate title be in one person’s name only?

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A property investment plan years in the making
object(stdClass)#1197 (52) {
  ["id"]=>
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  ["title"]=>
  string(75) "Regional Victoria showing up Melbourne in price performance, new data finds"
  ["alias"]=>
  string(74) "regional-victoria-showing-up-melbourne-in-price-performance-new-data-finds"
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  string(139) "

Median house prices in regional Victoria outperformed that of Melbourne in the June quarter, the latest REIV figures reveal. 

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Median house prices in the regions rose 4.0 per cent to $419,500 but in Melbourne they dipped by 0.6 of a percentage point to $840,000.

The result in Melbourne was due to a 0.8 of a percentage point fall in prices achieved at auction; this was despite a lift of 2.3 per cent in private sales.

Inner Melbourne suffered due to auction prices, where median prices fell by 4.9 per cent to $1,459,000 but it was middle Melbourne that was hardest hit, with a 5.4 per cent drop to $974,500.

Outer Melbourne had a good quarter with the median rising by 0.5 of a percentage point to $681,000.

Apartment prices in regional Victoria grew by 3.7 per cent to $304,500 while the metro media was up by 0.5 of a percentage point to $604,000.

REIV President Richard Simpson said that despite fewer sales, many sectors of the market were performing well.

“2017 was a bumper year and while the trendline has flattened, despite the fall in median house prices in the June quarter, median prices are still up this calendar year for both houses and units, in Melbourne and in the regions,” Mr Simpson said. 

In particular there was been strong growth in regional centres which is probably due to the first-home buyers’ concessions said Mr Simpsons.

“The first-home buyers’ concession has been a boon for regional areas. A new entrant to the property market buying a house at the regional median will pay no stamp duty, while a first home buyer of an apartment in Melbourne at the median price would pay stamp duty of nearly $25,000,” he said.

Mr Simpson said that more prospective buyers are looking towards regional Victoria which is also having an effect in Melbourne.

“Melbourne’s outer perimeter continues to grow. Small increases in the June quarter mean that the median prices for both houses and units have risen over 10.5 per cent from a year ago.

Mr Simpson said moving forward that vendors need more realistic expectations as the highs of 2017 are now over.

“Negative chatter about the future of the sector coupled with stronger lending controls by financial institutions has created some uncertainty and vendors need to be realistic with their price expectations,” Mr Simpson said.

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Regional Victoria showing up Melbourne in price performance, new data finds

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